News Corp. Cuts Earnings Outlook; Shares Fall

Media conglomerate News Corp. cut its forecast for annual earnings on Wednesday, saying underperformance at several businesses including its Fox broadcast network would offset a gain in earnings in the most recent quarter.

The company said operating income for the current fiscal year, which runs through June, would now grow by "mid- to high single digit" percentages, down from "high single- to low double-digit" percentages it predicted in November.

Fox's once-hot singing competition show, "The X Factor," failed to generate large audiences, while post-season NFL football also saw audience decline from a year earlier. Sky Italia, the company's satellite TV business in Italy, lost subscribers in a weak economy.

Shares fell 82 cents, or 2.9 percent, to $27.40 in after-hours trading, reversing a bump in the extended session after the company reported an increase in earnings for the last three months of 2012. Earlier in the day, shares fell 13 cents to close the regular session at $28.22.

"Clearly, 'X Factor' was a disappointment for us," Chief Operating Officer Chase Carey told analysts on a conference call. "Maybe early in the year, we were a little too optimistic."

The company, which is controlled by its lead shareholder and CEO Rupert Murdoch, said it earned $2.38 billion, or $1.01 per share, in the fiscal second quarter. That's up from $1.06 billion, or 42 cents per share, a year earlier.

Earnings got a one-time, $1.4 billion boost due to the company taking a bigger stake in pay TV networks Fox Sports Australia and Fox Star Sports Asia. It also posted a $131 million gain from participating in a stock buyback program at British Sky Broadcasting, which News Corp. has a stake of about 40 percent in. The one-time gains were offset by restructuring charges of $65 million related to newspapers abroad.

Excluding one-time items, adjusted earnings came to 44 cents per share, beating the 43 cents per share expected by analysts polled by FactSet.

Revenue was $9.43 billion, up 5 percent from $8.98 billion. The company says its pay TV network business helped grow revenue.

Analysts were looking for revenue of $9.26 billion.

News Corp. is planning to split into two companies this year — one for publishing and the other for the TV and movie businesses.

Media conglomerate News Corp. cut its forecast for annual earnings on Wednesday, saying underperformance at several businesses including its Fox broadcast network would offset a gain in earnings in the most recent quarter.